HLAS

Cash accounting was implemented to simplify account preparation for small businesses for tax purposes. Previously, it was applicable only to businesses with a turnover of up to £300,000. However, starting in 2024, it will become the default method for sole traders and partnerships. Notably, it won't apply to partnerships with corporate members or limited liability partnerships. Businesses affected will have the option to opt out of cash accounting and adhere to Generally Accepted Accounting Practice (GAAP), necessitating adjustments for accruals, prepayments, and other variations. Furthermore, businesses will have the flexibility to switch back to cash accounting if desired. Transitional regulations [...]

The adjustments to the High Income Child Benefit Charge (HICBC), as outlined in the Spring Budget, have now been enshrined in the latest Finance Bill and are slated to come into effect from April 6, 2024. The upsurge in the threshold for the tax charge brings some positive news, albeit there have been calls for its complete removal. HICBC aims to recoup child benefit where the higher earner in a partnership possesses adjusted income surpassing £60,000 (£50,000 up to 2023/24). The clawback rate will stand at 1% for every £200 of net income exceeding £60,000, with full recovery of child [...]

In the April edition, we shine a spotlight on some of the notable tax adjustments taking effect at the onset of the new tax year. While many income tax and national insurance thresholds remain frozen, leading to a growing number of higher rate taxpayers, there's a positive uptick in the High Income Child Benefit Charge (HICBC) threshold. Starting April 6th, both employees and self-employed individuals will experience a reduction in national insurance contributions, hinting at a potential future abolition. For the self-employed, significant alterations are on the horizon regarding profit computation, with "cash accounting" becoming the default method unless an [...]

The Department for Environment, Food & Rural Affairs (Defra) and the Forestry Commission have announced a significant uplift in England Woodland Creation Offer (EWCO) payments. The uplift is intended to promote an increase in tree-planting across the country. It takes effect immediately and offers more tailored tree-planting incentives to farmers and land managers, while also protecting food production farmland. Currently the maximum rate per hectare available from additional contributions is £8,000. This will increase to £11,600 – a 45% increase. Further new measures include a new Low Sensitivity Land Payment of £1,100 per hectare. This can be stacked onto the [...]

The Financial Conduct Authority (FCA) have said that they are assessing the extent of a pre-2021 problem with some car finance arrangements. Prior to January 2021, some brokers were permitted by lenders to adjust the interest rates on the car finance they arranged for customers. The rates were linked to the amount of commission that the broker received, and so typically a higher interest rate would mean a higher amount of commission for the broker. This was called a discretionary commission arrangement and naturally led brokers to increase the amount people were charged on their car loan. The FCA banned [...]

Last week, the Bank of Japan raised its key interest rate to a range of 0.0%-0.1% from -0.1%. The move comes after increases in consumer prices have led to wage rises. Official figures in Japan show that the core consumer inflation remained at the bank’s target of 2% for January. However, due to rising cost of living, the biggest companies in Japan agreed to a 5.28% salary increase earlier this month. This move triggered the bank’s decision to raise the base rate. Whether the increase will directly affect your business will likely depend on whether it trades with Japan. However, [...]

Last week, HM Revenue and Customs (HMRC) announced changes to its helpline services that will encourage people to go online first. However, in a fast about turn, the very next day they halted these changes while they consider how best to help taxpayers make more use of online services. The changes HMRC are proposing apply to Self Assessment, PAYE and VAT services. Feedback though suggests that there is still a significant number of people who are reluctant to deal with their tax affairs online. HMRC are keen to pursue online services because of the cost savings they bring. They revealed [...]

The original concept for national insurance contributions (NICs) was as a part of social welfare reforms implemented by the government in the early 20th century. The idea being to establish a social insurance that provides financial protection and assistance to individuals and families when sick or unemployed, or in old age. The National Insurance Act of 1911 required workers and their employees to start making contributions to a national insurance fund, which was to be used to finance various benefits. The national insurance system has been further expanded and refined since then, but now in 2024 national insurance contributions could [...]

The Prime Minister, Rishi Sunak, has announced reforms to apprenticeships that will enable up to 20,000 more apprenticeships and could be especially welcome news to small businesses. With effect from April 1st, the government will pay the full cost of training for anyone up to the age of 21. If you are a small employer this will mean that you no longer need to meet some of the training costs and may mean that taking on an apprentice becomes more viable. Education providers will also benefit as they currently need to source funding both from businesses and the government. Gillian [...]

The new tax year begins on 6th April and for employers running monthly payrolls, the March pay run will be the last of the 2023/24 tax year. Some things you will need to make sure you do and when you need to do them are listed below: Send your final payroll report of the year to HM Revenue & Customs (HMRC). You may need to mark in your payroll software that this is the final submission for the tax year. Update your employee records before 6th This may include new tax code notices. If your software automatically updates tax code [...]